David Cameron has flown back to Britain for emergency talks with ministers over the financial crisis engulfing Tata Steel’s British operation – amid warnings that the firm has just weeks to secure a rescue deal on which up to 40,000 jobs could depend.

The Indian-owned company said it was losing £1m a day, with a source claiming that the government’s failure to back calls in Europe for higher tariffs against cheap Chinese imports was the “last straw”, prompting the decision to sell the business that was once British Steel and more recently Corus.

Labour accused the government of being in “disarray” as Cameron and his business secretary, Sajid Javid, scrambled back to the UK after Tata announced it would be selling off British plants including the Port Talbot steelworks in south Wales as well as sites at Rotherham in South Yorkshire, Corby in Northamptonshire and Shotton in Deeside.

Jeremy Corbyn has urged Cameron to treat the unfolding situation as a national crisis by recalling parliament and considering bringing Britain’s ailing steel industry back into public ownership.

However, Javid rejected the idea of nationalisation, which government officials believe will carry a pricetag of £1.5bn a year. “I don’t think that nationalisation is going to be the solution,” said Javid. “I think everyone would want a long-term viable solution and, if you look around Europe and elsewhere, I think nationalisation is rarely the answer, particularly if you take into account the big challenges the industry faces.”

But the government is thought to be considering other forms of aid, including stepping in with temporary financial support during the search for a buyer.

The prime minister will travel to Washington DC on Thursday where dozens of world leaders are gathering for the Nuclear Security Summit, hosted by the US president, Barack Obama. Cameron is expected to raise the issue of Tata Steel with the Indian prime minister, Narendra Modi.

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The financial problems facing Tata are so significant that the value of its British steel operations are now “almost zero”. The company source said Tata was now prepared to “give it away for nothing”. They warned that Tata had tried and failed to find a buyer over the past 18 months because of the amount of money needed to get the company back on track.

“They have spent nearly £4bn in the last eight years. It would need another £4bn.” The company’s pension costs are a “huge problem”, they added, with Tata warning last year that it faced a £2bn pension deficit in the UK.

The decision to sell the operation could cost 15,000 jobs inside the company but the thinktank IPPR said that up to 40,000 could be affected more widely across the supply chain.

Tata’s decision came after Javid opposed calls last month to scrap a regulation known as the “lesser duty rule”, which would have allowed the EU to increase tariffs on Chinese steel beyond the current 9%. The government said this would lead to higher costs for users of steel and was not a proportionate response.

The government was also accused of failing to support British industry last year when it emerged that the Ministry of Defence would use Swedish steel for a multibillion pound contract for armoured cars and ships. Officials said rules had been changed to make that less likely in future.

Labour was able to dominate the debate about the future of Britain’s steelworks because key government figures were out of the country when the decision was taken by Tata’s board late on Tuesday. Cameron was on holiday in Lanzarote, while Javid was in Australia, despite knowing that the decision was likely to be made this week. Photographs of the business secretary at a black tie dinner in Sydney on Wednesday proved embarrassing for the government.

George Osborne is in Paris for G20 talks, where he will raise the issue of Tata Steel with European counterparts.

Corbyn cut short a holiday in the UK to head to the Port Talbot plant. He wrote to the prime minister to warn that the move had put “thousands of jobs” and “a strategic UK-wide industry” at risk. “Steelworkers and their families will be desperately worried about the uncertainty. The government is in disarray over what action to take. Ministers must act now to protect the steel industry, which is at the heart of manufacturing in Britain and vital to its future,” he added.

He accused the government of flip-flopping because of a suggestion from the minister Anna Soubry that part-nationalisation would be considered as part of a rescue. Corbyn said he was shocked to hear Javid pull the option off the table.

Roy Rickhuss of the Community trade union said: “Seeing confusion and mixed messages from ministers will only increase the worry of steelworkers across the UK.

“The fact that one minute they are saying they are looking at all the options and the next they’re saying some form of nationalisation is not a solution shows a government divided and without the political will to take the tough action necessary to save our industry.”

Stephen Kinnock, the Labour MP for Aberavon, where the Port Talbot plant is located, travelled with Rickhuss to Mumbai for last-minute talks with Tata, in which they tried to persuade the company to consider keeping hold of the operations.

He said the government had not offered support to the delegation and accused ministers of failing to take action to protect British steel, which has been in decline as a result of Chinese dumping.

“We are rolling out the red carpet for Beijing,” he said, arguing that Britain – and particularly Osborne – was pushing for China to get market economy status at the World Trade Organisation despite the fact that the vast majority of its steel industry was state-owned. He described Britain as a “ringleader” in blocking European commission attempts to improve anti-dumping policies.

“They are in hock to China. Our commercial policy, our approach to trade and manufacturing, and our overall industrial strategy, is being dictated by Beijing.”

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Javid spoke on the phone with the Tata Steel chairman, Cyrus Mistry, in what sources called a “constructive” conversation.

The prime minister spoke to the Welsh first minister, Carwyn Jones, to discuss the “urgent” situation.

A Downing Street spokesperson said: “Both the PM and first minister agreed it was an extremely worrying time for the workers and wider community in Port Talbot, and south Wales more broadly. They also agreed that the UK and Welsh governments would continue to work together closely to do everything possible to secure the future of steelmaking at Port Talbot and elsewhere in the UK.

“The PM and first minister pledged to work to support a sales process that delivers a sustainable long-term future for the plant. They also agreed to remain in close contact in the days ahead at both official and ministerial level.”

The situation has been seized on by Brexit campaigners with Labour MP Kate Hoey saying EU “regulations on energy production are killing our steel industry”.

But Remain supporters say Britain was the country holding back the EU from taking action against China.

Port Talbot, and other Tata sites with blast furnaces that actually make steel, are understood be particularly at risk because the financial losses are so large. Senior staff at Port Talbot are thought to be willing to launch a management buyout, but this is likely to need the unions to agree to cuts to the pension scheme and financial support from the government.

Tata has written off £2bn from the value of its UK assets, meaning they are effectively worthless. Koushik Chatterjee, the finance director of Tata Steel, said the UK business had become “quite a burden for the company” and that the board had decided “we can’t sustain this kind of exposure”.